Earnings per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method required for participating securities. We consider restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares.

Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. Basic EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding, adjusted for outstanding shares that are subject to repurchase.

For the calculation of diluted EPS, net income attributable to common stockholders for basic EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans. In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.

We have excluded 3 million and 18 million restricted stock units (RSUs) from the EPS calculation for the three months ended March 31, 2014 and 2013 because the impact would be anti-dilutive.

Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.

The numerators and denominators of the basic and diluted EPS computations for our common stock were calculated as follows (in millions, except per share amounts):

	Three Months Ended March 31,
	2014				2013
	Class A		Class B		Class A		Class B
Basic EPS:
Numerator
Net income	$	498	$	144	$	156	$	63
Less: Net income attributable to participating securities	2		1		1		1
Net income attributable to common stockholders	$	496	$	143	$	155	$	62
Denominator
Weighted average shares outstanding	1,982		574		1,709		691
Less: Shares subject to repurchase	5		6		4		10
Number of shares used for basic EPS computation	1,977		568		1,705		681
Basic EPS	$	0.25	$	0.25	$	0.09	$	0.09
Diluted EPS:
Numerator
Net income attributable to common stockholders	$	496	$	143	$	155	$	62
Reallocation of net income attributable to participating securities	3		—		2		—
Reallocation of net income as a result of conversion of Class B to Class A common stock	143		—		62		—
Reallocation of net income to Class B common stock	—		7		—		7
Net income attributable to common stockholders for diluted EPS	$	642	$	150	$	219	$	69
Denominator
Number of shares used for basic EPS computation	1,977		568		1,705		681
Conversion of Class B to Class A common stock	568		—		681		—
Weighted average effect of dilutive securities:
Employee stock options	15		15		80		80
RSUs	41		20		29		29
Shares subject to repurchase	8		5		4		4
Number of shares used for diluted EPS computation	2,609		608		2,499		794
Diluted EPS	$	0.25	$	0.25	$	0.09	$	0.09